We have been – and still are – in the midst of a crisis of epic proportions. But have we given any thought to the correlation between the way companies are dealing with the crisis and the impact on their reputation?
I believe that a crisis does not build character, but rather reveals it. The crisis is the litmus test for leaders and will reveal the true colors of organizations and societies as a whole. Since the start of the pandemic, we have seen very different reactions to the crisis. But among these, I have found the example of Ferrari – one of the most recognized brands on the planet, and a powerful societal force in Italy – very revealing. Let me expand on this a bit more.
Months after Covid-19 caused an emergency in Italy, Ferrari executives realized they had to get the company and its employees back on their feet. To do this, she launched a program called “Back on Track” (true to the benchmark of racing). It started out as an initiative to reopen the factory safely while keeping staff healthy. But the concept has turned into a real strategic program with a call to action from all concerned. The mantra, which would remain valid for the next 18 months, was to ensure the safest working conditions, the best operational and quality controls and emotional support – real teamwork: a program involving all employees at all levels, further strengthening their sense of belonging.
The program had been developed for some time. By early January 2020, Ferrari had already learned from colleagues in Asia and Ferrari’s Greater China offices about the potential impact and disruption of Covid-19. Long before the government took action, the team was therefore able to anticipate needs by working with experts, health professionals, virologists and regional authorities to establish a detailed action plan. This preemptive planning has also enabled the company to provide emotional support to all staff, their families and partners in the ecosystem we share. By combining the ability to anticipate and the agility to react quickly with substance and structure, “Back on Track” was implemented.
Ferrari has also supported its health initiative with a number of additional key commitments, including a substantial financial donation, a separate charity initiative with the “Ferraristi” (Ferrari owners) and a charitable giving matching program. It paid full salaries to all employees during this period (no layoffs, no state subsidies, no reduction in vacation pay). In addition, the CEO was in regular contact with employees, telling them about actions taken, showing them the care and support they received, and listening to what they had to say. In fact, “Back on Track” has become a strategic online program with a purpose and a sense of belonging for the entire Ferrari team, in perfect harmony with the traditional values of founder Enzo Ferrari.
So the “Back on Track” program worked for Ferrari, it seems. But can the ethical behavior shown by Ferrari executives during the crisis also be measured in terms of reputation for attracting and retaining talent more generally? RepTrack, a company that measures reputation and its evolution, provides useful information and data. There are seven factors that impact a company’s reputation, they say: Products and services, innovation, workplace, governance, citizenship, leadership and performance. And their findings based on an investigation carried out in Italy at the start and midpoint of the Covid-19 crisis are revealing.
It turns out that reputation is one of the few assets of companies – if not the only one – which, in general, has not been eroded by the crisis. It emphasizes and confirms that what companies have done in these first months after the initial spread of Covid-19 has met consumer expectations. But the drivers of reputation have changed. In January – before the pandemic hit – they were all about having a great product / service that meets customer needs. The demonstration of transparent and ethical corporate behavior, the implementation of proactive support to local communities and respect for the environment came in second and third place.
In April, however, in the wake of the impact of Covid-19, consumers drastically changed their expectations of businesses, at a speed RepTrak had never seen before. The main driver of reputation, trust and esteem today revolves around the behavior of companies in the marketplace. In other words, ethical behavior is now the number one driver. Product quality fell from first place to become the second driver, and to third place, the emerging importance of leadership. The reason companies have retained their reputation value, then, is that from January to April, most invested and prioritized helping and supporting the country’s needs, especially with regard to the country’s needs. health and safety issues arising from Covid-19.
It doesn’t mean the job is done. Many strategic challenges remain for companies, including how to maintain employee engagement as well as work-life balance in a permanent “work from home” environment. Companies that are able to adapt quickly and embrace change, with a laser-focused ethical culture and strong leadership at the forefront, will win in the redefined reputation economy. And in all of this, ethical leadership will not be a “good to own”, but rather a tangible asset that will improve a company’s reputation, with a profound effect on the perception of consumers and potential employees. Being ethical isn’t just the right thing to do, it’s the only way to move forward.
But it does indicate that the approach taken by Ferrari and other Italian companies is the right one. Ferrari has demonstrated with its “Back on Track” program how ethical leadership can be done well in times of crisis. But as she knows all too well, in a race it’s not just about “getting back on track” immediately after a pit stop. It is also – and above all – about maintaining a good performance until the end of the race. Hopefully we can see this not only at Ferrari, but also in all the companies vying for leadership.
by Paolo Gallo, author of “The Compass and the Radar”, and former director of human resources at the World Economic Forum